There are many changes to our current tax system with the recently signed, Tax Cuts and Jobs Act. It is going to take more time for tax advisers to fully comprehend how the new act applies to individual situations. In the meantime, the following Tax Cuts and Jobs Act Alert does a nice job of summarizing parts of the old and new law, as well as highlighting other changes.

After several interest-rate hikes this year, U.S. bond prices are looking for support and so far they have found it.

The iShares 7-10 Year Treasury ETF (IEF) closed today at $105.40. Since June, $104.75 has provided price support. Looking back to the start of 2016, a price of $101.50 has held ground. The average yield* for this bond ETF is currently reported to be 2.36%.

Looking at interest rate sensitivity, the effective duration on IEF is 7.5. This tells us it might only take a 50-basis point rate hike to move the price of IEF below $101, a real possibility next year. Durations change and the surprising bond rally, along with stocks during most of 2017, may mean bond investors will be giving up a bit more if rates continue to rise.

With the Fed Funds rate already at 1.5%, the Fed may come up against the rate they are reluctant to cross, 2%. It will be interesting to see how new Fed Chair, Jerome Powell, approaches rates next year. It is highly likely the Fed is concerned bond price sensitivity (duration) may go up in 2018; something bond investors should keep in mind. If you want to adjust your bond portfolio interest-rate sensitivity, now may be the time to do it.

There are a multitude of reason why the Fed needs to be more careful raising rates going forward; government-debt funding is at the top of the list. And let’s not forget, the Fed has just started unwinding a balance sheet with billions in bonds. There is no doubt Mr. Powell will have his hands full trying to appease the inflation hawks while selling bonds if the economy continues to grow. It looks like next year could be very different for the bond market.

Here’s a quick look at where other bond ETF prices are trading. As the charts below show, most of the bond market has taken this years’ rate hikes in stride.

It’s an exciting time in the world of innovation and entrepreneurship which is evident in the IPO market. There have been significant changes and I cover them along with interesting details about this important part of the global economy.

I have received a lot of inquiries about Bitcoin and other “cryptocurrencies” recently. As a finance related subject, I believe it is important to help individuals educate themselves so I offer the following learning resources.

I am not acting as an investment adviser in ANY capacity regarding information in this communication about cryptocurrencies (CC). As a finance topic, I am willing to pass along information to help people educate themselves further. The information contained herein and referenced externally is not enough information for anyone to enter the market for cryptocurrencies. Anyone that does their own research and gets involved with CC will need to stay engaged in the subject as future developments may require their attention. I am not offering any ongoing assistance in this area at this time.

THE FOLLOWING INFORMATION IS FOR EDUCATIONAL PURPOSES ONLY.

Warning, the cryptocurrency market is ripe for scams and there are likely many underway as I type these words. Proceed with caution and consider working with friends, family members, colleagues, etc. to explore this area together.

Individuals interested in understanding Bitcoin and related CC might want to begin by watching the movie, Banking on Bitcoin. It it also available on some on-demand networks. The documentary may help an individual determine their interest level in this subject. Another important video for understanding the ebbs and flows of the U.S. credit based economy can be found on YouTube, How The Economy Works, by Ray Dalio.

Phone App/Information Sources

A phone app, like HODL, can also be a great resource where fundamentals, news, charts and posts for different CC can be reviewed. A good app on your phone that tracks cryptocurrencies is a critical tool and next step for anyone interested in this market but you have to be careful, not all information is the same. Here are the names of a few respected thought leaders on the subject of CC.

Andreas Antonopoulos (Mastering Bitcoin book)

Trace Mayer (Bitcoin knowledge podcast)

Jimmy Song (Twitter)

Read posts on Reddit/Medium for information and support on many CC subjects ( currencies, exchanges, and wallets). There are also support forums for technical issues. There have been many different types of technical issues in the past and they should be expected in the future.

There are also blogs and newsletters dedicated to this topic, some better than others; you should be able to find several dedicated information sources on CC to explore and compare.

Also, when comparing the different CC, you are well served to dig into detail around factors that may have a big impact on the future of a CC. Here are a few additional topics to become familiar with overtime.

Governance – How are decisions made about the future of the CC?

Programmability – How easy it is to add features to the blockchain of the CC?

Merchant/Payment Tools – How robust are their services and tools for merchants/ecommerce developers?

There are many other subjects to consider (Encryption Type, Hashing Power, Mining Reward, Transaction Validation, etc.) with cryptocurrency and the underlying blockchain supporting it. This is a very fragmented and rapidly developing technology; the list of subjects above is incomplete but will help you dig into details you will want to understand if you are serious about CC.

Exchanges

A U.S. based exchange is most likely the best choice for U.S. residents although there appear to be some good exchanges in foreign countries. Exchanges connect with a bank account or credit card and provide the ability to make a CC purchase. Exchanges offer other features as well, like conversion to other CC. Beware, transaction fees, trading costs and wide-price spreads can be costly. Also, exchanges are not connected so the price listed at one exchange can vary dramatically from the price at another exchange, especially during periods of high volatility which have occurred frequently.

Reporting transactions is an important element of the CC market. The Internal Revenue Service has already come out with notices on the subject referred to as “virtual currency”. Participants in this market will want to keep good records and work with service providers that include accurate record keeping.

A quick internet search on U.S. cryptocurrency exchanges will provide more resources. Some exchanges are more sophisticated than others. One exchange that may be a good starting point for learning more about this service is Coinbase/GDAX but a full review of the competition should be completed before taking any action.

The website of some exchanges will operate on your phone. Others are better from a tablet or computer. Some exchanges offer a wallet but a different wallet provider from your exchange may be preferred.

Wallet

A wallet lets you take possession of the keys to your CC on a computer, phone or other personal device. LOST OR STOLEN KEYS IS A BIG RISK FACTOR WITH CRYPTOCURRENCIES. Some wallets may also allow you to convert to other types of CC inexpensively by using a feature like Shapeshift. You don’t need a wallet right away or even at all but it can be nice to have for the reasons mentioned.

THE FOLLOWING INFORMATION IS INTENDED FOR EDUCATIONAL PURPOSES ONLY. NO INVESTMENT RECOMMENDATIONS ARE BEING MADE. CRYPTOCURRENCIES ARE HIGHLY SPECULATIVE. INVESTING INVOLVES RISK, INCLUDING THE TOTAL LOSS OF CAPITAL INVESTED.

Cryptocurrencies

There are a lot of CC and the market is likely to change dramatically over time. Below is a list of some of the more successful CC at this time and may be worth watching. To keep track of CC winners and losers, individuals may want to pay attention to market cap, trading volume and price movements in addition to the subjects mentioned above. The list below will likely change dramatically overtime but here are some of the leading CC at present.

BTC – BITCOIN

ETH – ETHEREUM

XRP – RIPPLE

BCH – BITCOIN CASH

LTC – LITECOIN

IOT – MIOTA

DASH – DASH

XMR – MONERO

It will be interesting to see how this market evolves. There is a high likelihood CC will be with us for the foreseeable future; perhaps not in the present form. The current environment is a little like the “DotCom” era of the 1990’s; the potential for massive change from the current market is high.

Models of the economy are pretty useful tools. And simple models are some of he most useful. They help people envision how the world works. They help organize thinking.

For Example, the model that says the potential U.S. economic growth is determined by “population (labor force) growth” plus “productivity” is an elegant model that shows how adding workers, or having them become more productive, leads to more economic growth.

But, event an elegant model can lead people astray when the inputs are misunderstood. As they say, [Click To Continue]

Globalization, demographics, technology have been helping to keep a lid on inflation.

Continued low inflation could be a headwind for the performance of Treasury Inflation-Protected Securities (TIPS).

Low inflation helps to justify above-average valuations for stocks.

In the wake of the financial crisis, the Federal Reserve kept rates low, waiting for unemployment to fall and inflation to rise to the Central Bank’s long-term target. Several years ago, the unemployment rate passed the Fed’s target, but despite some [Click To Continue]

Today’s fasted pace world can make it difficult to keep track of all your financial information. You might want to know your current mortgage balance and when it will be paid off. Or your Net Worth and what retirement cash flows it is projected to generate. There are many important questions I help wealth builders answer with today’s leading technology and our advanced wealth strategies.

New demands for processing power from artificial intelligence and machine learning applications may be changing the cyclical nature of the semiconductor market, a welcome development from this promising industry.

In this video I provide an example of how innovation is providing new investment opportunities.

In the article linked below, Brian Wesbury – Chief Economist at First Trust, explains how U.S. tax policy over the last several decades has move from an environment where cutting taxes makes new spending difficult to a situation where government spending is so high tax cuts are hard to pass.

From a macro perspective, President Trump’s plan seems to do much of what Democrats have asked for by shifting a larger portion of the tax burden on individual high-earners while just about everyone in the bottom 60% gets a tax cut. This is hardly an ideal supply side tax cut. Republicans on the other hand, have lost their way. Even with a majority in the house and senate, republicans have shown little enthusiasm for helping President Trump with his agenda.

This is a unique time in our history where a confluence of events have come together unexpectedly and produced an accelerating economic environment. I believe tax reform could be another factor potentially leading us to the strongest economy so far in the 21st century.